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Employment in Spain: still a long way off from the knowledge society

Ramón Alós Moner, Centre for Sociological Studies on Everyday Life and Work (QUIT) and Institute of Work Studies (IET), of the Autonomous University of Barcelona

The data show the Spanish economy’s serious difficulties in generating sufficient employment, as well as the reasons why it remains stuck in dominant patterns of negligible added value and low or medium-low usage of technology.

Key points

1

Most of Spain’s economic fabric is based on low added value employment and a lack of investment in innovation, with few professional requirements and of low quality in terms of occupation.

2

The poverty rate among people in employment in Spain has grown from 11.7% in 2013 to 14.1% in 2016.

3

In Spain employment is very much over-dimensioned in the catering sector, the weight of which is more than double that of Germany, France or Italy.

Evolution of employment in Spain by activity sectors (in thousands)

After four years of employment recovery since the end of 2013, it can be said that the Spanish economy is suffering serious difficulties in generating: 1) sufficient employment, 2) qualified professional employment, and 3) quality employment in terms of working conditions. The first point is shown by the unemployment figures: of 3.8 million people at the end of 2017, half were long-term unemployed (over one year) and over a third were very long-term (over two years). To these people who are unemployed we could further add those who have desisted from job-hunting because they consider they will find nothing, those who have emigrated, and those who are sub-employed with occasional jobs and reduced working hours.

A comparison with Europe

If the sectorial distribution of employment in Spain is compared with its peer countries (Germany, France or Italy and the whole of the Eurozone), some significant differences stand out (table 1). Firstly, it is confirmed that in Spain, employment is very much over-dimensioned in the catering sector, the weight of which is more than double that of Germany, France or Italy (with the last two being countries precisely characterised by tourism). The fact that occupation in this activity has increased in Spain by 26% over the last four years forces questions to be asked regarding a possible excess of specialisation: this is an activity that, furthermore, is defined by its high degree of seasonality. In contrast, Spain is a long way from reaching the levels of Germany and the Eurozone in industry; the levels of France and Italy in public administration; and the levels of Germany, France and Italy in healthcare activities and social services. In short, this is a reflection of the lack of development of welfare policies in Spain.

Summary

This text analyses the main characteristics of employment in Spain and its evolution up to the end of 2017. The data show the Spanish economy’s serious difficulties in generating sufficient employment, as well as the reasons why it remains stuck in dominant patterns of negligible added value and low or medium-low usage of technology. Employment that is generated is mostly of low quality, which accentuates the divergence between the Spanish economy and the economies of countries that have made deeper inroads in the transition towards a knowledge society. This explains the dual need, firstly, for interventions that mobilise actors and support efforts to promote a different model of growth and of employment; and, secondly, for social policies that tackle imbalances in employment.

1. Spain: an economy that is not generating sufficient employment

After four years of employment recovery since the end of 2013, it can be said that the Spanish economy is suffering serious difficulties in generating: 1) sufficient employment, 2) qualified professional employment, and 3) quality employment in terms of working conditions. The first point is shown by the unemployment figures: of 3.8 million people at the end of 2017, half were long-term unemployed (over one year) and over a third were very long-term (over two years). To these people who are unemployed we could further add those who have desisted from job-hunting because they consider they will find nothing, those who have emigrated, and those who are sub-employed with occasional jobs and reduced working hours.

Thus, with an employment rate standing at 66% for the population aged 20 to 64 years at the end of 2017, Spain is a long way from reaching the 74% set as a target in the Europe 2020 Strategy (EC, 2017). Its employment rate is especially low for younger people (52% for those aged 20 to 29 years), a sign of the difficulties faced by this sector of the population in labour market access processes.

2. An economy based on low added-value activities

In the last ten years, since the start of the crisis, the Spanish economy has experienced a far from negligible change in its productive specialisation: manual employment has been destroyed in construction and to a somewhat lesser extent in industry, except in the food segment and vehicle manufacturing, and has been substituted by employment in services. Catering stands out as the sector generating most employment, although there is also growth in public services (health, education) and in certain professional services. Among the latter, three stand out, which while small in terms of volume of employment could set patterns for the future: programming, consulting and other activities related with information technology; business management consulting; and sporting, recreational and entertainment activities.

In the catering industry, close to half of the employment corresponds to salaried waiting staff, chefs and chef’s assistants; in commerce, there is an increase in salespeople in shops and stores. The fact that in both sectors the employment created is concentrated into tasks with mainly low requirements in terms of qualifications may be indicative of a shift towards activities based on occupations with little professionalisation. A different case is education, a sector where, following strong cutbacks in previous years, the employment of teachers is increasing. Also recovering employment are healthcare and care at residential establishments, a recovery that in both cases is concentrated in the private sector.

Most of Spain’s economic fabric is based on low added value employment and a lack of investment in innovation, with few professional requirements and of low quality in terms of occupation.

Since late 2013, few activity sectors have continued losing employment; however, three are worthy of highlight due to their significance: financial services, civil engineering (public works) and research and development. In short, it could be said that the economic fabric of the country continues to be sustained by jobs with little added value and a lack of investment in innovation, with a low level of professional requirements and low quality in terms of occupation (Banyuls et al., 2009).

3. A comparison with Europe

If the sectorial distribution of employment in Spain is compared with its peer countries (Germany, France or Italy and the whole of the Eurozone), some significant differences stand out (table 1). Firstly, it is confirmed that in Spain, employment is very much over-dimensioned in the catering sector, the weight of which is more than double that of Germany, France or Italy (with the last two being countries precisely characterised by tourism).

In Spain employment is very much over-dimensioned in the catering sector, the weight of which is more than double that of Germany, France or Italy.

The fact that occupation in this activity has increased in Spain by 26% over the last four years forces questions to be asked regarding a possible excess of specialisation: this is an activity that, furthermore, is defined by its high degree of seasonality. In contrast, Spain is a long way from reaching the levels of Germany and the Eurozone in industry; the levels of France and Italy in public administration; and the levels of Germany, France and Italy in healthcare activities and social services. In short, this is a reflection of the lack of development of welfare policies in Spain.

The characterisation outlined above is confirmed by referring to the composition of employment according to occupations (table 2). In this aspect, Spain stands out in relation with the Eurozone countries due to a lower presence of technicians and support professionals, compensated by a greater presence of services workers and salespeople, and of elementary occupations performed by unskilled personnel.

4. Low quality employment

The Spanish labour market has consolidated a broad space of low quality or precarious employment, in the terms defined by the ILO (2012). This is shown by high seasonality, which affects 26.7% of salaried workers, the spread of unwanted part-time work (affecting close to 60% of people working shorter hours) or the high figures for work contracts registered with public employment services.

In Spain’s labour market a broad space of low-quality or precarious employment bas become consolidated.

In the year 2017, a total of 21.5 million contracts were registered, with the salaried population standing at 15.9 million. As shown in table 3, many of these were short-term contracts (with 26% being up to 7 days) or contracts of unknown duration (35%). The data from the EPA (Active Population Survey) indicate that just under 30% of those people with a temporary contract had been working for over wo years in the same company, which suggests widespread unjustified use of this type of employment contract.

In turn and also in the year 2017, Spain’s Social Security registered up to 23.7 million people registered under the general regime and 23.1 million people deregistered, figures that are much higher than the number of salaried workers, which as already seen stood at 15.9 million people at the end of the same year. These figures can only be explained by a very high degree of staff rotation in jobs. This intensity of new registrations and de-registrations are especially common in certain activity sectors, including various sectors that have seen most growth in employment terms in recent years, such as catering and commerce, but also in healthcare activities or transport and warehousing.

The importance acquired by short-term occupation refers to a sizeable core of people in the labour market who link together episodes of employment that they alternate with others of unemployment. Vulnerability is the main trait that defines this population, for which the boundaries between employment and unemployment are blurred. And when the characteristics indicated date back some time and spread over the length and width of the territory, it can only be concluded that we are dealing with a severe structural problem, of which the most visible features are people being trapped in unemployment or in precarity. With evident repercussions beyond what is strictly the labour market, in relation to social inequalities, risk of poverty and social exclusion.

The poverty rate among people in employment in Spain has grown from 11.7% in 2013 to 14.1% in 2016.

This is why the poverty risk rate among employed people in Spain has increased from 11.7% in 2013 to 14.1% in 2016 (in absolute numbers, from 2 to 2.6 million employed people at risk of poverty). Spain’s Tax Agency has raised to 5.7 million the number of people in employment who did not reach the minimum wage in the year 2015. This collective includes above all the youngest group, although it also extends to more advanced age groups.

5. Labour market access for young people

This section focuses on employment among young people aged 25 to 34 years, since it is indicative of the opportunities that the labour market offers them in their job access processes. We leave out young people aged under 25 years as a large majority may still be in their first experiences of work.

Firstly, it should highlighted that training has a positive influence on the possibilities of access to the labour market in two aspects: in the possibilities of finding employment (graph 2) and, as will be seen, of accessing better jobs.

If observing in which activity sectors young people aged 25 to 34 years are employed, the first point that stands out is that up to 30% are employed in commerce and catering; 19% in public administration, education and healthcare activities, and 13% in financial intermediation, insurance, real estate activities and professional, scientific and administrative services.

Training expands the possibilities of young people for finding employment and for accessing better jobs.

In general, training opens up the doors for young people so that they can access better qualified jobs. However, barely 60% of young people in employment who have higher levels of education are working as technical experts or professionals, or as directors or managers. This means that another 40% of these qualified young people are underemployed in occupations that do not require higher studies (waiting staff, salespeople, administrative staff, etc.); this professional underemployment, as shown by some studies, is not always a transitory situation for these young people. The country’s economy, then, seems to be incapable of absorbing all of this knowledge potential.

Precarious employment especially affects young people. At the end of 2017, the employment contracts of 40% of young people were temporary contracts. This is a contract modality that in Spain is of little use in making the transition towards stable employment (see EC, 2017: 80-81). Seasonality varies little according to level of education, therefore higher levels of education do not guarantee greater contractual stability. The statistics of employment contracts confirm the situation described, as during the course of 2017 alone, a total of 6.6 million work contracts were registered for young people aged 24 to 35 years, with salaried workers at the end of that same year numbering a little over 3.4 million. Also part-time work falls more to young people than to the whole of the employed population and more to women than to men. This is an employment modality that is concentrated within certain services activities, very particularly within artistic, recreational and entertainment activities, administrative activities and auxiliary and catering services.

The fact that close to 900 thousand young people aged 25 to 34 years were unemployed at the end of 2017, with an unemployment rate of 19.0% (17.8% men and 20.2% women) shows the serious difficulties they face in their desire to access the labour market. And when they do get a job, as has been seen, it does not usually fulfil their expectations in terms of quality, stability and possibilities for professional development appropriate to their education level. While it is true that studies are important, in Spain they do not guarantee access to a good job or to an occupation that is appropriate to them.

6. Conclusions: employment, a reflection of the productive structure

Spain’s economic fabric has undergone changes since the economic and financial crisis that began in 2008, the most significant being the enormous decline in employment in the construction industry. However, after four years of recovery, an important part of the business fabric continues to be sustained by activities and jobs with little added value, low investment in innovation (such as catering, commerce and care services), some of which are subject to a high degree of seasonality. The paradox of the Spanish productive model is that, despite these characteristics, the employment generated turns out to be insufficient, a fact which is shown by the high unemployment rates and other indicators such as emigration, underemployment or people who desist from seeking work.

This evolution, which in the aspects noted distinguishes Spain from other countries in the area, is only partially compensated by greater employment in recent years in public services (healthcare activities and education) and in determined professional activities (basically consultancy and care services provided to companies).

The education level of the population in Spain changed radically some years ago; however, in the occupational sphere the changes are much more modest, which highlights the imbalance between supply and demand given the lack of professional requirements of the employment that exists and of that which is generated. The Spanish economy is based, then, on a business structure that shows itself to be incapable of absorbing the knowledge potential (studies), above all of young people, and that, therefore, may have difficulties in adaptation with regard to the challenge of the digital revolution.

But if the employment that is generated is insufficient, to this must be added the fact that it is largely of low quality. The high degrees of seasonality, the unwanted part-time employment, lack of professional and occupational security and low salaries are aspects that make it possible to talk of precarity in employment. Thus it can be said that the dominant growth model in Spain is leading to an increase in inequalities, whose most concerning features are people being trapped in unemployment, job vulnerability or insecurity and the increase in the poverty rate also affecting people in employment.

It can be concluded that this is a productive structure that is difficult to sustain, one that requires a change towards a more knowledge-based economy. Considerable consensus exists, also, in considering that the digital revolution is going to represent an important challenge for the country’s future, for businesses, for employment and for wellbeing (Eurofound, 2017).

This leads to the idea that policies are necessary aimed at reverting the current situation of the Spanish economy and its labour market, with stimuli that enable progress towards a knowledge society and social cohesion, that generate jobs that are sufficient in quantity and quality. With this goal what is needed, firstly, is the adoption of labour policies that improve occupation; secondly, social policies that tackle the problems arising from social inequalities and poverty; and thirdly, policies that anticipate changes with the aim of favouring a technological transformation that is inclusive, as pointed out by the Spanish Economic and Social Council, also in the field of employment and of labour relations (CES 2017). In this sense, what is indispensable is a firm commitment to innovation and knowledge across the entire business fabric, in line with the declaration by social agents that appeals to a State commitment that will contribute to Spain reaching the target set by the European Union of increasing the weight of industry up to at least 20% of the whole of the GDP by the year 2020.

In short, the country must choose between an economy sustained by low added-value activities, low or medium use of technology and low salaries, or alternatively promote a progressive transformation with the strengthening of more highly qualified activities and occupations, of greater added value, in principle less exposed to the impacts of the digital revolution and more appropriate to a knowledge society. Only this second option will enable it to compete within a new international context, not on the basis of the low costs of its services and products, but on the basis of its quality. If the first option produces an increase in social inequalities, the second should lead to an improvement in wellbeing and to greater social cohesion.

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